Feds net $102.4 million in Gulf lease sale

WASHINGTON — Dozens of companies offered $144.6 million in total bids during a government auction Wednesday for the rights to drill in the Gulf of Mexico, guided by fresh seismic research offering new hints about oil and gas that could lurk underground.

The new geological data captured last summer drove competition for drilling leases in the Gulf's Alaminos Canyon region, near Shell's Perdido production hub. For instance, four companies made widely ranging sealed bids — from a low of $5.8 million offered by Exxon Mobil Corp. to a winning $30.6 million bid offered by ConocoPhillips — for deep-water Alaminos Canyon block 475.

The bidding on that one block suggests that the companies liked what the sophisticated seismic surveys showed below an underground layer of salt in that region.

“This new data did find a much better image of the prospectivity of the blocks,” said John Rodi, a Gulf regional director for the Bureau of Ocean Energy Management, which conducted the auction. “Companies that may not have been bidding in this area before all of a sudden had new interest.”

All told, the federal government is set to collect $102.4 million in winning bids for 53 lease blocks in western Gulf waters. That falls short of the government's $134 million take from a similar auction of western Gulf tracts last year, but still beats the Interior Department's most lackluster sale in 1992, which brought in just $30.6 million in winning high bids.

“This sale was not eye-popping and may be closer to a yawner,” said Randall Luthi, president of the National Ocean Industries Association. The potential costs of looming new offshore regulations and the relatively low price for natural gas may have suppressed interest, Luthi said.

ConocoPhillips submitted the most in high bids, spending $50.3 million to nab 29 tracts.

But the Gulf's largest leaseholder, BP, opted out of the sale. The British oil giant is suspended from new government contracts in connection with the 2010 Deepwater Horizon disaster.

The ocean energy bureau said it would accept bids from the company but wouldn't award it any leases unless the company's debarment ended during a 90-day post-sale evaluation period. BP's decision suggests the company does not believe its suspension will be lifted during that period.

“Due to our extensive portfolio of Gulf acreage and the uncertainty surrounding the suspension and debarment of certain BP businesses, we have decided not to participate in this week's lease sale,” BP said in a statement. “We hope we can reach a reasonable resolution with regulators so that America's top energy investor over the past five years can once again enter into new contracts with the U.S. government.”

With 61 total bids on 53 blocks, the auction followed a recent trend toward fewer offers overall for Gulf territory, as companies focus their attention on a smaller number of options.

It also reflected the relatively low interest in the mostly shallow-water western Gulf of Mexico, by contrast to the central region, where most of the deep-water leases lie. The bulk of the bids in Wednesday's sale — 48 of the 61 — were for territory in at least 2,624 feet of water, demonstrating the industry's continued deep-water interest.

“There's just not that much prospective acreage available in the deep water in the western Gulf,” he noted.

In addition, relatively few areas were newly available in Wednesday's sale, just 107 out the 3,864 blocks originally up for grabs. Sales with a great deal of newly available acreage from recently relinquished leases can attract more interest.